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Aviva’s operating profit surges 12% to £3.01bn in 2016

IBR Staff Writer Published 10 March 2017

Aviva has reported a 12% increase in operating profit to £3.01bn for the full year of 2016, compared to £2.68bn in 2015.

The British insurance giant said that the growth was driven by better performances from its fund arm Aviva Investors and its Canadian, British, Irish and Italian units.

The company said an additional three month contribution came from Friends Life in the UK alongside favourable foreign exchange effects.

Aviva stated that the impact of the change in the Ogden discount rate in UK general insurance has been marked as an exceptional item, and was excluded in its reported operating profit and operating EPS.

The insurer's operating capital generation stood at £3.5bn, while business unit cash remittances surged 20% from £1.5bn in 2015 to £1.8bn.

Aviva’s general insurance net written premiums in 2016 increased to £8,2bn at 15% from the 2015 figure of £7.2bn.

The insurer stated that the life insurance value of new business increased by 13% in 2016 to £1.4bn in comparison to the £1.2bn figure in 2015.

Aviva’s Solvency II coverage increased from 180% in 2015 to 189% in 2016 and currently is reported to be more than its 150-180% working range.

The insurer said that in wake of the positive results, the total dividend has been hiked 12% from 20.8p in 2015 to 23.3p. Further, it stated that with an additional capital and with £1.8bn of centre liquidity, it plans more additional returns in capital along with hybrid debt reduction in the current year.

Aviva CEO Mark Wilson said: “Aviva’s financial position has been transformed and a distinctly stronger balance sheet and excess capital give Aviva more options.

"We are now actively planning a capital return to our shareholders and debt reduction in 2017 and will invest further to grow our businesses.

“The numbers speak for themselves. Fund management delivered a breakout year with strong positive net flows and operating profit up 30%. General insurance is growing, with operating profit up 17%1, and in UK Digital we have doubled online registrations to five million.

Wilson concluded that Aviva is transforming into a digital disruptor for the benefit of customers.

Image: Head office of Aviva in St Helen’s, London. Photo: courtesy of Aviva plc.